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On Wednesday April 6, 2011, 11:21 am
TORONTO, ONTARIO--(Marketwire - April 6, 2011) - Active Control Technology Inc. (TSXV:ACT.V) ("ACT" or the "Company"), a leading provider in the design, manufacture and marketing of both wireless and fiber network solutions for mine communications, and the commercial security and access control industries, today announced that it has signed a letter of intent ("LOI") to acquire all of the shares of PowerCart Inc. ("PowerCart"), a key supplier of ACT's Node infrastructure for ActiveMine.
The total purchase price for the PowerCart shares will be satisfied through the issuance of that number of ACT common shares equal to 50% of current issued and outstanding capital of ACT. On closing, shareholders of PowerCart will hold 33% of ACT after giving affect to the transaction. In addition, the vendors will be granted two seats on ACT's board of directors. At its Annual General and Special Meeting of Shareholders held on Thursday February 10, 2011, shareholders approved the right to consolidate the outstanding capital of the Company on the basis of one (1) post-consolidation common share for up to every twenty (20) outstanding common shares (the "Consolidation"). The Company will determine the appropriate Consolidation ratio and consolidate its outstanding capital immediately before closing the transaction with PowerCart.
PowerCart currently has revenues of $2.5 million and earnings of $240k which will be immediately accretive to ACT. The new combined entity is expected to be cash-flow positive with improvements in margins and overheads
The combination is expected to bring considerable synergies:
-- Strengthened management team with expertise in contract manufacturing and cost optimization -- Additional sales team for new business development -- Cash and access to additional capital -- Immediate improvement in gross margins from integration of a key supplier -- Strengthened engineering and regulatory talent -- Existing locations improve proximity to customers, and -- Considerable tax loss carry-forwards to shield earnings.
"We are thrilled with the synergies that the PowerCart team will bring to ACT" said Graham Warren, ACT's CEO. Jonathan Emanuel, PowerCart's CEO commented: "by joining forces, we can fully capitalize on ACT's industry-leading technology and market position as well as continue to grow PowerCart's strong customer base".
The transaction is subject to customary due diligence, is conditional upon PowerCart having $700,000 in working capital on closing and is subject regulatory approvals. The transaction is expected to close within 60 days.
About PowerCart
PowerCart is the original industry founder of mobile power solutions with a legendary reputation for reliability and on-time delivery with over 30,000 units sold. PowerCart continues to lead the industry in design and innovation, for solutions requiring backup and mobile power. PowerCart offers all of its solutions in the retail, warehousing, courier and mining sectors with a bumper-to-bumper one year warranty - the best in the industry. PowerCart has locations in Mississauga, Ontario, Canada, and Medina, Ohio, USA. For more information, visit www.powercart.com.
About Active Control Technology
Active Control Technology is involved in the design, manufacture and marketing of both wireless and fiber network solutions for mine communications, and the commercial security and access control industries. The Company has two product lines: ActiveMine(TM), a fully integrated wireless and/or fiber communications and locating technology for underground coal mines, and ActiveSecure(TM), a family of wireless products for the access control industry. Located in Burlington, Ontario, Canada, Active Control Technology trades publicly on the TSX Venture Exchange under the symbol ACT. For more information, visit www.activecontrol.com.
Cautionary Note Regarding Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and, as such, are subject to risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as changes in demand for and prices for the products of the Company or the materials required to produce those products, labour relations problems, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, or expected. We do not intend and do not assume any obligation to update these forward-looking statements, except as required by law. The reader is cautioned not to put undue reliance on such forward-looking statements.
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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.
Contacts
Graham Warren
Active Control Technology
President and CEO
905-670-5500
gwarren@activecontrol.com
www.activecontrol.com