/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
TORONTO, April 29, 2021 /CNW/ - Further to the press
releases issued on July 16, 2020 and
August 31, 2020, OV2 Investment 1
Inc. (the "Corporation") (TSXV: OVO.P), is pleased to
announce that it has entered into a definitive merger agreement
(the "Agreement") dated April 23,
2021 with EasTower Group, Inc. ("EasTower") and
EasTower Acquisition Corporation ("Subco"), a wholly-owned
subsidiary of the Corporation, pursuant to which the parties intend
to complete their previously announced business combination by way
of a three-cornered merger (the "Transaction"). The
Transaction is expected to constitute the Corporation's Qualifying
Transaction under Policy 2.4 – Capital Pool Companies
("Policy 2.4") of the TSX Venture Exchange (the
"TSXV"), subject to TSXV approval. Pursuant to the
Transaction, EasTower and Subco will merge, with EasTower surviving
as a wholly-owned subsidiary of the Corporation. The Corporation
proposes to change its name to "EasTower Group Holdings Inc." and,
upon completion of the Transaction, will carry on the business of
EasTower. The Transaction is an arm's length transaction. A copy of
the Agreement will be made available on the Corporation's SEDAR
profile at www.sedar.com.
Description of EasTower
EasTower is a private company incorporated under the laws of
Florida on July 27, 2015 and is based in Boca Raton, Florida. EasTower, through its
wholly-owned subsidiary, EasTower Communications, Inc., is a U.S.
provider of wireless communications infrastructure and related
services. EasTower specializes in the construction, installation,
upgrade and maintenance of wireless communication systems,
including 5G, 4G and small cell deployments as well as first
responder or FirstNet initiatives. Their diverse, top-tier customer
base includes major telecom providers, global OEMs, corporations
and federal agencies. EasTower is currently focused on operating
within the southeastern U.S. states and is planning to expand to
additional southwestern U.S. states. Selected financial information
from EasTower's unaudited financial statements for the years ended
December 31, 2019 and 2020, is as
follows:
|
Year Ended Dec 31,
2019
(US$ -
unaudited)
|
Year Ended Dec 31,
2020
(US$ -
unaudited)
|
Revenue
|
$2,814,100
|
$2,895,200
|
Net profit
(loss)
|
$(2,920,800)
|
$(1,943,100)
|
Total
assets
|
$746,000
|
$680,500
|
Total
liabilities
|
$4,892,700
|
$5,190,900
|
Shareholder equity
(deficit)
|
$(4,146,700)
|
$(4,510,400)
|
EasTower currently has 26,453,214 shares of common stock
("EasTower Shares") issued and outstanding held by over 101
shareholders.
Terms of the Transaction
Prior to and in connection with the Transaction, the Corporation
will: (i) consolidate its common shares ("OV2 Shares") into
8,000,000 post-consolidation OV2 Shares (representing an exchange
ratio of 0.797309081 post-consolidation OV2 Shares for each one
pre-consolidation OV2 Share) (the "Consolidation"), (ii)
change its name to "EasTower Group Holdings Inc.", and (iii)
continue from being a corporation governed by the Canada
Business Corporations Act to being a corporation governed by
the Business Corporations Act (British Columbia). As a result of the
Consolidation, the Corporation will have 8,000,000
post-Consolidation OV2 Shares issued outstanding and outstanding
options to purchase 797,309 OV2 Shares.
Under the terms of the Agreement, the parties have agreed to
complete a business combination involving a triangular merger among
the Corporation, EasTower and Subco, whereby EasTower and Subco
will merge under the Florida Business Corporations Act, with
EasTower surviving as a wholly-owned subsidiary of the Corporation
(the "Merger"). Pursuant to the Merger, former holders of
shares of common stock of EasTower ("EasTower Shares") will
receive from the Corporation (at and after the Merger, the
"Resulting Issuer", as defined under the policies of the
TSXV) post-Consolidation OV2 Shares ("Resulting
Issuer Shares"). Concurrent with consummation of the
Merger, each EasTower Share issued and outstanding immediately
prior to the effective time of the Merger and held by a Canadian
resident shareholder shall be transferred by such holder to the
Corporation in exchange for one OV2 Share
(post-Consolidation).
In connection with the Transaction, the Corporation and EasTower
have entered into a finder's fee agreement, pursuant to which
EasTower shall issue an aggregate of 1,200,000 EasTower Shares to
Starber Enterprises Inc. (a company controlled by Darren Sontowski), OV2 Capital Inc. (a company
controlled by Sheldon Pollack),
Babak Pedram and Elizabeth Adamou
(collectively, the "Finders") immediately prior to the
Merger, subject to the approval of the TSXV and the receipt of
all approvals of the Corporation's shareholders required pursuant
to TSXV rules.
On closing of the Transaction, the Corporation will issue one
OV2 Share (post-Consolidation) for each one EasTower Share,
EasTower will become a wholly-owned subsidiary of the Corporation
and the Corporation will carry on EasTower's business.
In connection with the Transaction, the Corporation and EasTower
intend to complete two non-brokered private placements.
EasTower intends to complete a private offering of units
("Units") for minimum gross proceeds of $425,000 and maximum gross proceeds of
$1,000,000 at a price per Unit of
$0.25 (the "EasTower
Financing"). Each Unit will consist of one EasTower Share
and one-half of one common share purchase warrant of EasTower (each
whole warrant, a "EasTower Warrant"). Each whole
EasTower Warrant will be exercisable for one EasTower Share at an
exercise price of $0.40 per EasTower
Share for a period of 24 months from the issuance thereof. A
finder's fee may be payable in connection with the EasTower
Financing equal to 8% of the gross proceeds payable in cash and
broker warrants equivalent to 8% of the number of Units issued.
Each broker warrant shall be exercisable for one EasTower Share at
an exercise price of $0.40 per
EasTower Share for a period of 24 months from the issuance
thereof.
The Corporation intends to complete a non-brokered private
placement of subscription receipts ("Subscription
Receipts") for minimum gross proceeds equal to $3,000,000 less the amount raised in the EasTower
Financing and maximum gross proceeds of $3,000,000 at a price per subscription receipt of
$0.25 (the "OV2
Financing"). Immediately prior to close of the Transaction,
each Subscription Receipt will be exchanged for one OV2 Share
(post-Consolidation) and one-half of one common share purchase
warrant of the Corporation (each whole warrant, a
"Warrant"), for no additional consideration. Each whole
Warrant will be convertible into one Resulting Issuer Share at an
exercise price of $0.40 per Resulting
Issuer Share for a period of 24 months from the issuance thereof. A
finder's fee may be payable in connection with the OV2 Financing
equal to 8% of the gross proceeds payable in cash and broker
warrants equivalent to 8% of the number of Subscription Receipts
issued. Each broker warrant shall be exercisable for one Resulting
Issuer Share at an exercise price of $0.40 per Resulting Issuer Share for a period of
24 months from the issuance thereof.
The net proceeds of the EasTower Financing and the OV2 Financing
(collectively, the "Financing") will be used to fund the
continued expansion of EasTower's business, provide working
capital, and for general and administrative expenses.
If the Transaction is completed, and assuming $3,000,000 is raised in the Financing, it is
anticipated that, immediately thereafter, the Resulting Issuer will
have 59,601,258 Resulting Issuer Shares outstanding, with (i) the
shareholders of EasTower holding approximately 64.5% of the
outstanding Resulting Issuer Shares, (ii) the shareholders of OV2
holding approximately 13.4% of the outstanding Resulting Issuer
Shares, (iii) the Finders holding approximately 2.0% of the
outstanding Resulting Issuer Shares, and (iv) the subscribers in
the Financing holding approximately 20.1% of the outstanding
Resulting Issuer Shares.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, third-party and board
approvals and consents, satisfaction or waiver of all conditions
set forth in the Agreement, the approval of the TSXV and
requisite shareholder approvals.
Management and Board of Directors of the Resulting
Issuer
Upon connection with the Transaction, it is anticipated that all
of the existing directors and officers of the Corporation will
resign and the directors and officers of the Resulting Issuer will
consist of the following:
Vlado Hreljanovic, Chief
Executive Officer, President and Director
Mr. Hreljanovic is a results-driven executive with proven
leadership ability to attract and mentor management teams and lead
highly productive operations. He has over 20 years of experience in
management and business development, including overseeing of
wireless infrastructure services for major telecommunication
carriers, as well as national and international wireless tower
companies. In addition, Mr. Hreljanovic has 20 years of public
market experience on the NASDAQ markets. He began his professional
career at KPMG and holds a B.S. in Business Administration,
Fordham University.
Margaret Perialas, Executive
Vice-President and Director
Ms. Perialas is a proven leader with over 25 years experience in
the telecommunications, aerospace, healthcare, oil and gas
industries. She has directed and lead efforts for the enterprise
transformation encompassing strategic development and deployment,
activities designed to extend technological and operational
capabilities on a global basis. She holds a Bachelor's Degree
from Urbana College in Business Administration.
Paul Perialas, Chief Financial
Officer and Chief Operating Officer
Mr. Perialas is a seasoned, entrepreneurial financial executive,
leader, and business partner with an extensive and diverse industry
background with a focus on organizations undergoing significant
change. He has over 20 years of experience with a solid blend of
public and private company experience with increasing financial
responsibility and a proven track record of accomplishment in
delivering financial results, operational excellence, and business
development activities. He holds a B.S. Degree in Accounting and
Finance, Defiance College; MBA Finance,
Miami University.
Ted Boyle, Director
Mr. Boyle is a senior communications industry executive with
more than 30 years of management and consulting experience in
business development, sales, technology, marketing and promotion.
He has a demonstrated record of accomplishment in the internet,
wireless, satellite and cable industries having served each in
progressively senior responsibilities. He currently sits on
the boards of Global Nexus Ltd. and Asian Television Networks
International Limited (a TSXV listed issuer).
Fred Buzzelli,
Director
Mr. Buzzelli is the principal partner of B C & C
Professional Corporation, Chartered Professional Accountants and
Advisors. Mr. Buzzelli received his BBA from Wilfrid Laurier University, School of Business and
Economics. He articled with Price Waterhouse & Co., where he
qualified as a member of CPA Ontario and CPA Canada.
Joe Liberman, Director
Mr. Liebman is a co-founding partner of Liebman, Goldberg &
Hymowitz, LLP which was established in 1977. Mr. Liebman and his
firm provide tax, audit and advisory services to an array of
industries, including but not limited to real estate, technology
construction, telecommunications, and restaurants. Mr. Liebman
holds a B.S. in accounting from CUNY Queens and received his CPA
license in 1975.
Arm's Length Transaction, Sponsorship & Regulatory
Matters
As the Transaction is not a Non-Arm's Length Qualifying
Transaction for the purposes of TSXV Policy 2.4. The Transaction
will not require approval of the Corporation's shareholders
(although certain matters relating to the implementation of the
Transaction, such as the Consolidation, the proposed change in the
Corporation's name and the Continuance will require shareholder
approval). Other than any securities held by directors of the
Corporation in each of the Corporation and EasTower, none of the
Insiders (as such term is defined in the policies of the TSXV) of
the Corporation own any interest in EasTower or its assets or has
any relationship with EasTower.
Trading in the common shares of the Corporation has been
suspended and the shares are not expected to resume trading until
the Transaction has been completed. If the Transaction is
completed, the Corporation expects to be listed on the TSXV as a
technology issuer.
The Corporation intends to make an application for an exemption
from the sponsorship requirements of the TSXV in connection with
the Transaction, however there is no assurance that the TSXV will
grant such exemption from all or part of the applicable sponsorship
requirements.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSXV acceptance and
applicable pursuant to TSXV Requirements, majority of the minority
shareholder approval. Where applicable, the Transaction cannot
close until the required shareholder approval is obtained. There
can be no assurance that the 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 Transaction, any information released or
received with respect to the 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 Transaction and has neither approved nor disapproved
the contents of this news release.
Forward Looking Information
When used in this news release, the words "estimate",
"project", "belief", "anticipate", "intend", "expect", "plan",
"predict", "may" or "should" and the negative of these words or
such variations thereon or comparable terminology are intended to
identify forward-looking statements and information (together,
"forward-looking information"). Although the Corporation
believes, in light of the experience of its officers and directors,
current conditions and expected future developments and other
factors that have been considered appropriate that the expectations
reflected in these forward-looking information in this news release
are reasonable, undue reliance should not be placed on them because
the Corporation can give no assurance that they will prove to be
correct. The forward-looking information in this news release
include information relating to the business plans of the
Corporation and EasTower, the Transaction (including TSXV approval,
satisfaction of the conditions set forth in the Agreement, and the
closing of the Transaction), the completion of the Financing, and
the officers, directors and insiders of the Corporation upon
completion of the Transaction. Such statements and information
reflect the current view of the Corporation and EasTower,
respectively. Risks and uncertainties may cause actual results to
differ materially from those contemplated in these forward-looking
information.
By their nature, forward-looking information involves known
and unknown risks, uncertainties and other factors which may cause
the Corporation's actual results, performance or achievements, or
other future events, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking information. Such factors include, among others,
the following risks: (i) there is no assurance that the Corporation
and EasTower will obtain all requisite approvals for the
Transaction, including the approval of the TSXV for the Transaction
(which may be conditional upon amendments to the terms of the
Transaction); (ii) following completion of the Transaction, the
Resulting Issuer may require additional financing from time to time
in order to continue its operations and financing may not be
available when needed or on terms and conditions acceptable to the
Resulting Issuer; (iii) new laws or regulations could adversely
affect the Resulting Issuer's business and results of operations;
and (iv) the stock markets have experienced volatility that often
has been unrelated to the performance of companies. These
fluctuations may adversely affect the price of the Resulting
Issuer's securities, regardless of its operating performance. There
are a number of important factors that could cause the
Corporation's and EasTower's actual results to differ materially
from those indicated or implied by forward-looking information.
Such factors include, among others: changes to the regulatory
environment; industry competition; inability to implement growth
strategy; results of operations and activities; and general market
and industry conditions. The Corporation undertakes no obligation
to comment on analyses, expectations or statements made by third
parties in respect of the Corporation or EasTower, their respective
securities, or their respective financial or operating results (as
applicable).
The Corporation cautions that the foregoing list of material
factors is not exhaustive. When relying on the Corporation's
forward-looking information to make decisions, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. The Corporation has assumed
that the material factors referred to in the previous paragraph
will not cause such forward-looking information to differ
materially from actual results or events. However, the list of
these factors is not exhaustive and is subject to change and there
can be no assurance that such assumptions will reflect the actual
outcome of such items or factors. The forward-looking information
contained in this news release represents the expectations of the
Corporation as of the date of this news release and, accordingly,
is subject to change after such date. Readers should not place
undue importance on forward-looking information and should not rely
upon this information as of any other date. The Corporation does
not undertake to update this information at any particular time
except as required in accordance with applicable laws.
The securities referred to in this news release have not
been, nor will they be, registered under the 1933 Act and may not
be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons
absent U.S. registration or an applicable exemption from the U.S.
registration requirements. This press release does not constitute
an offer for sale of securities, nor a solicitation for offers to
buy any securities in the United
States, nor in any other jurisdiction in which such offer,
solicitation or sale would be unlawful. Any public offering of
securities in the United States
must be made by means of a prospectus containing detailed
information about the company and management, as well as financial
statements.
SOURCE OV2 Investment 1 Inc.