MCM Capital One Inc. Signs Letter of Intent With Enerdynamic Hybrid Technologies Inc. as Its Qualifying Transaction

MCM Capital One Inc. Signs Letter of Intent With Enerdynamic Hybrid Technologies Inc. as Its Qualifying Transaction
  
 

TORONTO, ONTARIO--(Marketwired - Jan 24, 2014) - MCM Capital One Inc. (TSX-VENTURE:ZGN.P) ("MCM"), a Capital Pool Company, wishes to provide further details concerning the letter of intent (the "LOI") dated October 3, 2013 for the acquisition of Enerdynamic Hybrid Technologies Inc. ("EHT"), previously announced on October 9, 2013. The acquisition, if completed, will constitute MCM's qualifying transaction pursuant to the policies of the TSX Venture Exchange Inc. (the "Exchange").

The Proposed Qualifying Transaction

The acquisition of EHT (the "Acquisition") is to be completed no later than January 31, 2014 as a share exchange through the issuance of one common share of MCM for each common share of EHT, and one warrant to purchase an MCM common share for each warrant to purchase an EHT common share. The exercise price and term of the MCM warrants will be the same as those for the EHT warrants being purchased.

It is a condition of closing the Acquisition that EHT will raise at least $4,000,000 through the First Private Placement and the Second Private Placement described below. Completion of the Acquisition is also conditional on the execution of a definitive share exchange agreement to be negotiated among the parties, the satisfactory completion of due diligence, approval of the Acquisition by the directors of MCM and EHT, approval by the shareholders of MCM of the name change and appointment of the directors described below and Exchange acceptance of the Acquisition.

The acquisition by MCM of all of the issued and outstanding shares in the capital of EHT is not a Non-Arm's Length Qualifying Transaction under the policies of the Exchange. The Acquisition will not be subject to approval of the shareholders of MCM. However, it is a condition of the Acquisition that the shareholders of MCM shall have approved the appointment of the directors described below and the change of MCM's name to Enerdynamic Hybrid Technologies Corp. or such other name as EHT and MCM may agree upon.

EHT Capital Structure and Financing

EHT is conducting a brokered private placement (the "First Private Placement") to raise up to $3,000,000 by issuance of units (the "First Placement Units") at $0.25 per unit, each unit consisting of one EHT common share and one warrant (a "First Placement Warrant"). Each First Placement Warrant will entitle the holder to acquire one common share at a price of $0.50 per share at any time prior to 5:00 p.m. (Eastern Standard Time) on the date that is 12 months (the "First Anniversary") following the date on which the shares of EHT either (a) become publicly traded on a recognized stock exchange, or (b) are exchanged for shares in a corporation which are (or become in connection with such exchange) publicly traded on a recognized stock exchange (in either case, the "IPO Date") and, at a price of $0.75 per Share during the period following the First Anniversary and ending at 5:00 p.m. (Eastern Standard Time) on the date that is 24 months following the IPO Date. EHT has raised approximately $2,700,000 in the First Private Placement and expects to complete the balance of the First Private Placement.

EHT intends to conduct a second brokered private placement (the "Second Private Placement") to raise up to $8,000,000 by issuance of units (the "Second Placement Units") at $0.50 per unit, each unit consisting of one EHT common share and one-half of a warrant (a "Second Placement Warrant"). Each whole Second Placement Warrant is to be exercisable for one EHT common share at a price of $1.00 for a period of 2 years following closing. The Second Private Placement will close immediately prior to the closing of the Acquisition.

A minimum of $4,000,000 must be raised as a condition of closing the Acquisition. A maximum of $11,000,000 would be raised if both of those private placements are fully sold. The proceeds of the First Private Placement and the Second Private Placement will be used as follows:

Use of Proceeds	Assuming the Minimum Raise of $4,000.000		Assuming the Maximum Raise of $11,000.000
Research and development	750,000		1,500,000
Purchase of machinery and equipment	750,000		1,200,000
Inventory and raw materials	1,000,000		2,000,000
Agent's fees and other costs of the private placements and qualifying transaction	500,000		1,125,000
Working capital	1,000,000		5,175,000

Immediately prior to the First Private Placement, there were 31,885,493 EHT common shares and warrants to purchase 4,225,000 EHT common shares at $0.25 each for a period of approximately 2 years. Up to an additional 8,000,000 EHT common shares and 4,000,000 First Placement Warrants could be issued in the First Private Placement and up to an additional 16,000,000 EHT common shares and 8,000,000 Second Placement Warrants could be issued in the Second Private Placement.

Kingsdale Capital Markets Inc. will act as the agent for the First Private Placement and the Second Private Placement and it will receive a 7.5% cash commission, 24 month warrants to purchase First Placement Units equal to 10% of the First Placement Units sold, 24 month warrants to purchase Second Placement Units equal to 10% of the Second Placement Units sold, plus an advisory fee consisting of 1,082,538 EHT common shares. Rob Fia, the CEO and a director of MCM, is Co-Head Corporate Finance of Kingsdale Capital Markets Inc.

MCM Capital Structure and Financing

MCM intends to conduct a non-brokered private placement (the "MCM Private Placement") to raise up to $200,000 by issuance of common shares at $0.20 per share.

There are 3,350,000 MCM common shares now outstanding and up to 1,000,000 MCM common shares could be issued in the MCM Private Placement. MCM has 460,000 common share purchase warrants outstanding, exercisable at prices between $0.20 and $0.23.

Enerdynamic Hybrid Technologies Inc.

EHT, an Ontario corporation, has acquired (i) substantially all of the assets of OSM Solarform Corp. ("OSM"), a solar panel manufacturer, and (ii) the energy products technology of EnerDyanamic Systems Inc. ("ESI"). Prior to completion of the acquisition of those assets, EHT did not have any operations or assets. EHT did not assume any of the liabilities of OSM or ESI. As a result of the acquisition of those assets, EHT is in the business of manufacturing and distributing solar panels and vertical wind turbines that are combined with solar panels for optimal energy creation and which will be used to power micro grids for use on cell phone towers, light poles, trucks and remote locations. EHT will carry on its manufacturing and distribution business from the OSM facility in Welland, Ontario.

OSM Solarform Corp.

OSM was founded in 2011. OSM is a privately held Canadian corporation headquartered in Welland, Ontario. Prior to the sale of substantially all its assets to EHT, OSM designed, assembled, manufactured and distributed photovoltaic solar panels in Canada. Based on OSM's September 30, 2013 unaudited financial statements prepared in accordance with Canadian generally accepted accounting principles, OSM had gross revenues of $5,215,011, an adjusted EBITDA of $106,033, and retained earnings of ($2,272,876). OSM's total assets and total liabilities were $5,784,596 and $8,057,472, respectively, as at September 30, 2013.

EnerDyanamic Systems Inc.

ESI was founded in 2010. ESI is a privately held Ontario corporation headquartered in Brantford, Ontario. ESI is focused on developing innovative products that capture both wind and solar energy. This new technology, known as Ener-Tree, is the first true wind and solar hybrid generator available in a single, portable device. ESI is a research and development company and has no sales and no measurable fixed assets or liabilities.

The controlling shareholder of ESI is Tom Bryson, of Brantford, Ontario, who owns securities carrying 100% of the voting rights attached to the shares of ESI.

MCM Capital One Inc.

MCM, a capital pool company within the meaning of the policies of the Exchange, was listed on the Exchange on or about January 24, 2012. MCM does not have any operations and has no assets other than cash. MCM's business is to identify and evaluate businesses and assets with a view to completing a qualifying transaction under the policies of the Exchange.

Insiders of the Resulting Issuer

The planned officers and directors of MCM, upon completion of the Acquisition, are:

John Gamble - CEO and Director

John Gamble has over 25 years working with international public and private companies in the energy, environmental, resource and technology sectors and 8 years experience in the renewable energy and clean tech sectors and has worked on raising over C$25 million in public equity issues

Tom Bryson - President and Director

Tom Bryson has over 20 years of international business and engineering experience with large public companies and 7 years experience in renewable energy product development, patenting and licensing he has also set up and managed international divisions and supply chain management for tier 1 auto supplier

Bruce Bent - Director and CFO

Mr. Bent is the Vice President of Finance with Matthews Southwest Development, a $500 million development company based in Dallas Texas and Mississauga, Ontario. Mr. Bent has a successful track record of enhancing both top and bottom line performance through a clear, consistent focus on margin improvement, cost management and effective analysis of possible business opportunities. Mr. Bent has held various directorships in both private and public companies.

Paul Ghezzi - Director

Paul Ghezzi is the CEO of Solar Income Fund (SIF). SIF is a Canadian-based company focused on the development, ownership and management of solar PV energy power generation installations backed by long-term power purchase agreements. Mr. Ghezzi has been focused on creating structured opportunities in the renewable energy sector since 2006. With experience in Europe, North America and most recently Central and South America, Mr. Ghezzi is veteran of the solar energy industry with a strong understanding of all facets of the solar value chain. Under his leadership the SIF group of companies is managing in excess of 10 megawatts of solar energy projects in Ontario and have a pipeline of over 250 megawatts of solar energy projects, in development, globally.

Rob Fia - Director

Rob Fia is Co-Head Corporate Finance of Kingsdale Capital Markets Inc., an investment dealer. Mr. Fia is also the CEO and a director of MCM. Mr. Fia has over 14 years' experience in the investment business, including both equity research and corporate finance.

Litigation Claim

On November 28th, 2013, Dynamic Systems Holdings Inc. ("DSHI") commenced an action pursuant to a statement of claim issued in Toronto (Court File No. CV-13-10345-00CL) against, among others, ESI, Tom Bryson, Pole-R Power Inc. ("PRP"), EHT, OSM and MCM, seeking relief which includes damages in the amount of $30,000,000.00, the disgorgement of the Defendants' profits, and certain other relief, including injunctive relief (the "Claim"). The Claim was amended on December 16th, 2013 to add Allan Cruikshank as a defendant. The Claim principally stems from certain alleged breaches under license agreements and other contractual relations between ESI, Bryson and DSHI, the alleged misappropriation by all of the defendants of information alleged to be confidential and proprietary to DSHI, the alleged interference by all of the defendants in the economic relations of DSHI and alleged negligence by the law firm acting for ESI, PRP, Bryson and DSHI in connection with commercial arrangements amongst those parties. On January 17th, 2014, ESI, Tom Bryson and PRP filed a statement of defence and counterclaim denying the allegations against them set forth in the Claim and, pursuant to the counterclaim, seeking relief against DSHI and two of its principals, Allen Scott and Angelo Carlucci, which includes $30,000,000.00 in damages and declarations that certain of the license agreements and other commercial agreements are of no force or effect. Also on January 17th, 2014, EHT and OSM filed a statement of defence in which they denied the allegations against them in the Claim.

Tom Bryson, the President of ESI, when asked about the litigation stated "I do not believe there is any merit to the claim brought by the plaintiffs and I'm confident that the defendants will be able to successfully defend this claim".

Further Information

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to TSX Venture Exchange 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 by 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 proposed transaction and has neither approved nor disapproved the contents of this press release.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Forward Looking Information

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward-looking information. Forward-looking information includes the transfer of assets to EHT, the satisfaction of the conditions of the Acquisition, the amount raised in the First Private Placement and the Second Private Placement and the insiders of the resulting issuer. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, achievements or performance may vary materially from those anticipated and indicated by these forward looking statements. The material risk factors that could cause actual results to differ include the risk of delays in completing the private placements, the risk that EHT may not be able to raise sufficient funds through the private placements, the risk that the shareholders or directors of MCM may not approve the elements of the Acquisition which require their approval, the risk that the resulting issuer may not satisfy the listing requirements of the Exchange and the risk that the due diligence of the parties may result in a decision not to proceed with the Acquisition. Although MCM believes that the expectations reflected in the forward-looking information are reasonable, it can give no assurances that the expectations of any forward-looking information will prove to be correct. Except as required by law, MCM disclaims any intention and assumes no obligation to update or revise any forward-looking information to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise.

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).

MCM Capital One Inc.Joseph HengDirector & [e-mail]