MESSAGE FROM CEO TED MANN December 12, 2016
MESSAGE FROM CEO TED MANN
I am writing to you regarding the pending sale of Slyce’s operating assets to a wholly owned subsidiary of Anzu Partners, which is a Washington, DC investment firm. Many of you have reached out to me personally to discuss the transaction. By now, you have hopefully received an Information Circular in the mail that provides details of the transaction, along with proxy materials enabling you to vote on the proposed sale.
As indicated in recent quarterly disclosures, Slyce has been facing a going-concern problem throughout 2016. From the day I assumed the lead executive position a year ago, I, with the management team, have worked tirelessly to streamline the business — dramatically cutting the cash burn, reducing executive compensation by half, and continuing to grow revenue. However, our fundraising prospects dimmed considerably in 2016 following a failed public financing attempt last winter. Slyce’s current liabilities are approximately $3.4 million (and increasing) and cash on hand is immaterial.
The consideration Anzu is offering for the Slyce assets includes:
- CDN $2,835,000 in cash;
- a 7.5% economic interest in the Purchaser (i.e. the private subsidiary of Anzu that will continue operating the Slyce business);
- assumption of certain liabilities totalling approximately CDN $329,000;
- offers of employment to substantially all employees and assumption of certain financial obligations related to employees that accept employment with the Purchaser;
- fully paid, worldwide rights to use of four provisional patents;
- fully paid license for the Pounce app that enables users to scan product images and complete purchases “in app”; and
- US $45,000 per month for provision of technical support services during a transition period.
The transaction is expected to provide Slyce with sufficient resourcing to leverage its expertise by re-purposing the Pounce app and becoming a technology integrator in an adjacent market, which we believe can create additional shareholder value, augmented by unrecorded tax assets. Slyce will continue to benefit from financial participation in the core business.
Acknowledging with regret that this is not the “win” that we had all hoped for as shareholders, I hope you will vote your shares in support this transaction, as it represents the only viable path for Slyce to avoid insolvency and to sustain upside potential for investors. You might ask “Why stick it out with the new owners?” My reasons are: 1) I've seen how accurate and effective our technology can be; 2) I think our product roadmap is the most exciting technology work I've been a part of; 3) our sales pipeline is as bright as it has ever been; and 4) the business will be properly financed to execute on its strategy.
Please feel free to contact me if you wish to discuss this further.
Ted Mann